© 2013 rockwell publishing washington real estate practices lesson 5: sales techniques and...

Washington Real Estate Practices

Lesson 5:

Sales Techniques

and Practices

Listing Practices

Listing agent: obtains listings by finding listing

prospects and giving listing presentationsservices listings by advertising

properties, holding open houses, and communicating with sellers

Listing Sources

Sources of listings: farmingcold callsexpired listingsfor sale by ownersreferrals

Listing SourcesFarming

Farming: choosing neighborhood and building reputation within that neighborhood.Long-term process: can lead to steady

source of listings once agent is well-established.

Example: Sheila is getting started in real estate and decides to farm a neighborhood.She chooses her own neighborhood,

since she knows it and many of its residents.

She sends introductory letter to all 400 homes and follows up with personal visits.

She sends annual newsletter with real estate info plus neighborhood news.

During holidays, she revisits every home, leaving a calendar.

As she becomes known in the neighborhood, residents think of her when deciding to list their homes.

Farm is chosen based on three factors:diversityaffinityturnover

Diversity: neighborhood has some variation in style of houses and type of resident.Diverse neighborhood is more likely to be

a source of listings even if one segment of market is weak.

Affinity: agent likes neighborhood and feels comfortable there.

Turnover: people are moving in or out, creating listings and sales.

Listing SourcesCold calls

Cold calling: calling homeowners and asking if they (or anyone they know) are interested in selling their homes.Can be random or planned.Inexpensive; done in free time.

Cold calling is effective only if many calls are made.100 calls may generate 1 listing

appointment.

Cold callers cannot call those on Federal Trade Commission’s do-not-call registry.

Agent must:check numbers against online registryhonor request not to be called againnot block Caller IDcall within permissible hours

Listing SourcesExpired listings

Listings expire because: property wasn’t marketed properlyprice was not reduced when it should

have been

Expired listings can be transformed into active listings.

When listing expires, agent can ask sellers if they’re interested in re-listing. Avoid criticizing previous agent’s selling

efforts.

Did listing fail to sell because owners were unmotivated? If so, any agent may have trouble selling the property.

Never try to convince seller to terminate existing listing in order to switch agents. Could lead to lawsuit based on

interference with contract.

Listing SourcesFor sale by owners

Agents can find listings by contacting FSBOs (sellers trying to sell houses on their own). Sellers have already decided to sell.

Convince FSBOs that resources and skills enable agent to sell faster and for higher price.

Agents may contact:all FSBOs, or only FSBOs in certain neighborhood or

price range.

FSBOs can be found through “for sale by owner” signs and classified ads.

Agent may try to win over seller by offering advice, rather than asking for listing. Might send a package with sample forms

and tips on preparing property for open house.

Agent may contact FSBO if she has a particular buyer in mind for that property. Agent can ask FSBO for a one-party

listing (listing agreement that is valid only regarding one particular buyer).

Listing SourcesReferrals

Good idea to cultivate referral network of other real estate professionals and financial services providers (mortgage brokers, escrow officers, attorneys, accountants).

May also obtain referrals through satisfied clients.

First step in building a referral network is networking: let friends, family, colleagues, and acquaintances know you’re in real estate and seeking clients.Goal is to create chain of referrals.

Let influential persons in community (centers of influence) know you’re looking for clients.Attorneys, doctors, public officials, and

others who regularly interact with many people.

Use local community service groups (churches, PTA, Chamber of Commerce, etc.) to make useful contacts.

Don’t join too many groups and participate only superficially.

Maintain a referral file to keep track of contacts, when you last contacted them, and what those contacts suggested.

SummaryListing Sources

Farming Cold callingExpired listingsFor sale by ownersReferrals

After locating prospective seller, agent makes listing presentation to seller.Listing presentation must be professional

and thoroughly prepared.

Listing Presentations

Listing presentation is important opportunity to discuss listing price. Agent should encourage seller to list

property at competitive price, and present information suggesting property’s market value.

Listing Presentations

Listing PresentationsBefore the presentation

To prepare for presentation: research propertyvisit propertycomplete competitive market analysis

Before the PresentationResearching the property

First, obtain basic property info:legal descriptionplat mapproperty tax informationownership information

Sources of info: local title company or county recorder’s office, real estate websites.

Before the PresentationVisit the property

Before preparing CMA, get permission to inspect property and:count the roomslook for special featureslook at the construction qualitylook for characteristics that indicate whether

house is worth more than normal, based on location, age, and square footage

Before the PresentationVisit the property

Also look at neighborhood for any external factors that might affect value:quality of nearby homes access to shopping and parksreputation of local schools

Before the PresentationCompetitive market analysis

When familiar with property and neighborhood, prepare CMA, using prices of comps to estimate reasonable listing price.

Three types of properties can be used in CMA:homes that recently sold homes that are currently listedhomes where the listings have expired

Prices paid for recently sold properties are best indications of property’s value.

Prices of current listings indicate what buyer might pay for available comparable property.

Prices from expired listings represent what reasonable buyer would not pay for similar home.

Listing Appointment

Things to bring to listing appointment: CMA listing agreement form marketing plan info about you and your brokeragenet proceeds to seller form

Listing AppointmentPresenting the CMA

Agent should stress that seller—not agent—sets listing price. Agent only offers advice as to what

reasonable listing price might be. CMA provides evidence that suggests

appropriate listing price.

CMA form should include all info gathered for CMA, as well as estimate of property’s market value.CMA shows that pricing conclusions are

based on fact.

When presenting CMA, focus on objective data on both seller’s property and comps: square footageroom countagelocationterms of sale

Objective data will help seller understand neighborhood’s current market and encourage more realistic listing price.

CMA typically presents three figures:general price rangesuggested listing price (usually on high

side)what agent expects property to sell for

Estimated sale price should be close to the property’s true market value.

Listing AppointmentNet proceeds to seller

Use net proceeds to seller form to estimate for sellers how much cash they’ll walk away with once sale has closed.

Listing AppointmentBackground information

Be prepared to discuss yourself and your company, focusing on positive aspects of your career (education, training, experience, and any awards or achievements).

Also discuss brokerage’s success rate, available resources, and membership in MLS.

Listing AppointmentBackground information

Discuss services you’ll provide during listing period, such as advertising property and holding open houses.

Use written marketing plan to aid discussion.

Listing AppointmentListing agreement

Go over listing agreement with sellers, reviewing its basic terms and answering any questions.

Leave a copy of the form with the seller. (Of course, if seller signs, license law requires leaving a copy.)

Listing AppointmentAgency disclosure

Agent must let all parties know whom he represents.

Signing a listing agreement creates an agency relationship.

Listing AppointmentAgency disclosure

Listing agent should inform seller that he represents only the seller.

Agent must provide seller with copy of pamphlet explaining Washington’s Real Estate Brokerage Relationships Act.

SummaryListing Presentations

Before the presentationCompetitive market

analysisNet proceeds to seller Background information Listing agreementAgency disclosure

Servicing the Listing

Servicing listing: entering property into MLS communicating with seller preparing the property for showing holding open houses advertising listing modifying listing if needed

Servicing the Listing Communicating with seller

Remain in frequent contact with seller through process of marketing and showing property. Regular progress reports reassures

seller you’re working hard and reduces misunderstandings.

Servicing the Listing Communicating with seller

Describe what will happen during listing period:marketing strategies to be used how to prepare property for showing role of keyboxinstructions for what seller should do

during showings and open houses

Communicating with Seller Weekly activity report

Weekly activity report summarizes inquiries about property and any showings. It should include copies of ads and

comments from other agents or prospective buyers.

Servicing the Listing Preparing the property

Preparing house for sale requires thorough cleaning and perhaps minor repairs.Explain to seller that renovations make

house more marketableSellers often recoup much of what is

spent on minor renovations.

To get a property into prime condition:mow and water lawns weed flower bedsremove dead or damaged plantings and

plant extra flowersprune trees and shrubs

rake up old leaves and debriscover bare ground with bark or gravelpressure wash siding and roof and

replace missing shinglesfix broken fences or railingsclean porches and decksrepaint if necessary

remove toys and bikes from walkways and driveways

clean up garage and/or shedfix any broken door or window screensclear out clutterrepaint walls a neutral shade

shampoo carpets and replace any outdated or worn carpets

repair any cracks in wallsfix leaky faucets and squeaky doors

Preparing the Property Security

Seller should remove small valuables from home during listing period. Keep jewelry/coins in safety deposit box. Move or secure fragile vases or artwork.Before a showing remove laptops, tablets,

and cellphones.

Preparing the Property Keys and keyboxes

Seller gives agent copy of key. Key is stored in keybox: locked box

attached to the front door that only agents can access.

Servicing the Listing Advertising the property

First/most important advertisement occurs when agent submits listing to MLS. Usually as soon as listing is signed. Lets other MLS agents know house is

available.

“For sale” sign on property is very effective and cost-efficient advertising. Potential buyers interested in neighborhood

will see sign and call about properties they like.

Flyers: single letter-sized pages with property photos/sketches and info (price, terms of sale, number of bedrooms and bathrooms, square footage, year of construction).

Leave flyers inside house so info is available to prospective buyers taking tour.

Leave flyers in box attached to home’s “for sale” sign, so passersby can get info.

Listed homes are often advertised in newspapers and online. Most ads are classified ads: small ads

with several lines of text. Display ads, which are larger and

include graphics, are more expensive and may not generate more interest.

Advertising helps sell properties and increases agent’s exposure to potential buyers. When unrepresented buyer calls about a

listing, agent has opportunity to discuss other properties and enter into a buyer agency relationship.

The Internet is very important advertising venue. Large brokerages and real estate

organizations maintain websites with photos and detailed info on thousands of listings.

Many smaller brokerages and individual agents also operate websites.

Agents must be aware of federal and state restrictions on advertising. Rules govern truthfulness and the

disclosure of financing terms.

Advertising the Property License law restrictions

Washington real estate license law forbids misleading advertising by licensees.

Advertising must state brokerage’s name as licensed—otherwise, it’s a “blind ad” and violates license law.

Advertising the PropertyTruth in Lending Act

Federal Truth in Lending Act applies to anyone placing ad offering consumer credit (this includes agents advertising private homes for sale).

Act prohibits ad from describing only a loan’s most attractive terms without disclosing true costs of financing.

If ad contains a “trigger term,” ad must make other required disclosures.

Trigger terms include:amount of downpayment (such as “10%

down”)amount of any payment (such as “Only

$1,500 per month”)

number of payments (such as “360 monthly payments”)

period of repayment (such as “30-year loan term”)

amount of any finance charge (such as “1% financing fee”)

If any trigger terms are used in an ad, the following disclosures must be made:amount of downpaymentterms of repaymentannual percentage rate (APR)

Annual percentage rate (APR): relationship of total finance charge to loan amount, expressed as an annual percentage.

APR is always higher than loan’s quoted interest rate, since it includes all other fees paid to lender (such as loan fees and discount points).

These won’t trigger required disclosures:“7% APR loan”“Low monthly payments”“Save money with an adjustable-rate

mortgage”“Low-cost FHA and VA financing

available”

Servicing the ListingHolding open houses

Open houses rarely result in immediate sales, but are a good opportunity to meet prospective buyers or sellers.Open houses usually occur only once or

a few times, typically when property is first listed.

Servicing the ListingHolding open houses

Basic steps of open house:select day/time when sellers can be goneadvertise and prepare flyersclean/arrange home for showingput out directional signs in neighborhoodput out guest logwelcome guests and give toursfollow up with thank-you notes to guests

Holding Open HousesSetting day and time

Set day and time for open house when it’s convenient for sellers to be away.

Let sellers know that potential buyers are often uncomfortable looking at a house with the owners present.

Holding Open HousesMore tips

Always remain at open house for entire scheduled duration, even if business is slow. If you must leave, get another colleague

to fill in for you.

If open house ends before sellers return, make sure no visitors remain, and lock up properly.

Listing Modifications

If listing price was too high, might have to modify listing agreement.Meet with seller to discuss lowering

price. Offer evidence to support decrease

(prices of comps that sold or were listed after seller’s property was listed).

Listing Modifications

Listing may need to be modified if expiration date is approaching and no sale is pending.

Meet with seller to sign listing extension. Be prepared to discuss your marketing

efforts and possible reasons why the property hasn’t sold.

SummaryServicing the Listing

Communicating with seller

Preparing the propertyAdvertising the propertyTruth in Lending ActOpen housesListing modifications

Selling Practices

Selling agents must:locate prospective buyers and convince

them to enter into a buyer agencyfind out what kind of home they wantshow them appropriate propertieshelp them make offer and negotiate sales

Selling PracticesTypes of buyers

Buyers fall into four general categories: first-time buyers trade-up buyers empty-nesters retirees

First-time buyer: usually inexperienced, and needs education/encouragement. Typically has limited funds and is looking

for smaller, low-priced home. May get advice from friends and relatives.May be relying on parents or other family

for financial help.

Trade-up buyer: intends to sell current home to use proceeds for new home. Often is looking for larger home for family. Relies less on others’ advice and has a

better idea of wants and needs. Typically can make a large downpayment

using equity from current home.

Empty-nesters: owner whose children have left home and who wishes to trade larger home for smaller property with less upkeep. May want to move closer to work or family,

or move from suburbs back to urban core. Can usually make substantial downpayment

using built-up equity.

Retiree: also looking for smaller, easily maintained home, such as condo or townhouse. May want to move closer to family, or to

area with better climate. May be concerned with keeping monthly

payments low, due to fixed income.

Selling PracticesFinding a buyer

Buyers are often found through same techniques used to find sellers, such as advertising and holding open houses. Many prospective buyers call agents after

seeing name on “for sale” sign.

Selling PracticesFinding a buyer

Buyers may call or visit brokerage to find agent, without a particular person in mind. “Call-ins” and “walk-ins” are helped by

the agent on floor duty (assigned to handle phone calls and visits).

Selling PracticesDetermining needs

Determine prospective buyer’s housing needs by asking two questions: What does buyer want?What can buyer afford?

In the past, many agents prequalified their buyers. Prequalification: informal process in

which agent uses basic underwriting rules to help determine how much buyer can afford to spend

Today, most real estate agents advise buyer to get preapproved by lender.

Preapproval: lender agrees to loan up to a specified amount, as long as buyer chooses home that meets lender's standards.

Determine the maximum amount a buyer can spend before showing her properties. Showing unaffordable properties is

counterproductive: it wastes time, and can discourage the buyer.

Buyers usually know what they want—you help them prioritize their needs.Never try to manipulate buyers into

buying a particular home because it would benefit you.

Selling PracticesShowing properties

Showing property effectively is a critical task for a buyer’s agent.

Always research and plan your efforts:Know what properties are available, as

well as local and national market trends. Develop sales speeches to encourage

buyers to close deal.

Selling PracticesSelecting listings

Agent should only choose houses to show that are within buyers’ price range. Buyers may want to see houses priced

below what they can afford; it’s up to them to decide how much to spend.

Selling PracticesSelecting listings

Never show more than five or six properties in one day.Buyers get tired and houses start to look

the same.

Showing propertiesPreviewing properties

Preview home before showing it to buyers. Seeing house’s best and worst features in

advance lets you know what aspects to emphasize/downplay at showing.

Showing propertiesPreviewing properties

Research area before a showing.This helps you avoid getting lost on the

way, and allows you to answer questions about school district boundaries, distance to shopping areas, and so on.

Showing propertiesInside the homes

Read buyer’s signals and body language.Buyer’s nonverbal cues will help you

understand buyer’s likes and dislikes.

Showing propertiesInside the homes

You don’t need to talk a lot during a showing—give buyers time and space to picture themselves living in home, and to discuss property’s pros and cons. Just shadow the buyers and be available

to answer any questions.

Selling PracticesMaking an offer

Under statute of frauds, any offer to purchase real estate must be made in writing. The offer, once signed by the seller,

forms valid purchase and sale agreement.

Making an OfferOffer and counteroffer

Agents must submit any offer to seller, whether or not it seems reasonable. It’s seller’s decision whether or not to

accept offer.

Offers are typically given to listing agent, who presents them to seller. Buyer’s agent, however, may want to be

present when offer is presented, in case seller has questions about buyer.

Offers are rarely accepted without some modification to purchase price or terms, such as closing date or date of possession.Negotiation typically involves

counteroffers.

Making an OfferNegotiation

Agents must maintain professionalism and discourage hostility between parties.

When presenting offer, present positive aspects first, to discourage seller from rejecting offer before hearing all of its terms.

Making an OfferNegotiation

Parties should receive copies of any documents (offers, counteroffers, and purchase and sale agreement) they sign, at time of signing.

Making an OfferMultiple offers

If seller receives multiple offers, listing agent should present all of them at the same time.

Seller’s options: reject all offers accept one offer make a counteroffer to one offeraccept one offer while making a backup

counteroffer to another offer

Seller is most likely to choose highest priced offer, but other factors might be considered, such as:length of escrow periodabsence of contingenciespersonal appeal from buyers (since

decision to sell is emotional as well as financial)

Get buyers preapproved before making an offer, especially in a tight real estate market. Formal preapproval indicates buyer is

serious about buying and is financially able to do so.

Making an OfferAgency disclosure

Washington law requires agent to inform any party to transaction which party that agent represents.Buyer must receive disclosure before

signing offer to purchase.Seller must receive disclosure before offer

is presented.

SummarySelling Practices

Finding a buyerDetermining needsShowing properties Making an offer

Safety Issues

Agents must take precautions about:safety of their clients and customers their clients’ possessionstheir own safety

Safety Issues

Never show buyer a house that is being built or renovated; instead, arrange for contractor to show the property. Construction sites can be hazardous,

particularly if buyer brings small children.

Safety Issues

Be mindful of seller’s possessions when showing property or holding an open house. If possible, have sellers remove valuable

items from property beforehand.

Safety Issues

During open house, encourage all visitors to sign log book, and avoid leaving prospects unattended.

Safety Issues

After showing, make sure house is locked and key is properly secured in keybox. Agents must take responsibility for

keeping keyboxes as secure as possible.

Safety Issues

Agents must take sensible precautions for their own safety.It is advisable to ask customers for photo

ID at first meeting.

Safety Issues

Ideally, work in pairs when hosting open houses or showing properties. If that’s not possible, ask customer to

meet you at your office, and proceed to showing from there.

Safety Issues

Legitimate customers usually will abide by your safety rules, especially if you explain it’s in their best interest as well.A client who insists on meeting you at a

property or who “cannot” leave a number or address isn’t a good risk.

Safety Issues

When showing properties, always tell your office where you’re going and when you’ll return. You may also want to check in with

someone via cell phone on a regular basis.

Real Estate Assistants

A real estate assistant handles administrative tasks, giving agent more time to solicit and work with clients.Assistant may be compensated either

through salary or salary-plus-commission basis, and may work full- or part-time.

Assistant may or may not have real estate license. If agent hires unlicensed person, must

take special care to make sure assistant doesn’t perform any duties requiring a license.

Under Washington license law, unlicensed assistants may not: Show properties, answer questions, or

interpret information about the property, price, or condition.

Interpret information about listings, titles, financing, contracts, closing, or other information relating to a transaction.

Fill in legal forms or negotiate price or terms.

Hold or disburse trust funds.Perform any act with the intent to

circumvent, or which results in the circumvention of, real estate licensing law

New licensee might choose to begin as an assistant, to gain experience and connections before taking on agent responsibilities. Or licensee might choose to work as a

salaried assistant to ensure regular paycheck.

Licensee might simply be uncomfortable with selling and negotiating, and prefer to work in real estate in a less stressful position.

Real Estate AssistantsAssistant’s duties

Tasks delegated to assistant will vary, depending on assistant’s experience, and whether or not the assistant is licensed. Specific duties will also depend on

individual brokerage office practices.

Assistant’s DutiesOffice administration

Assistants (licensed or not) are typically given task of maintaining agents’ transaction files.Assistant may organize these

documents, and photocopy and distribute any duplicates that need to go to different parties.

Transaction file can include:listing agreementoffers and counterofferspurchase and sale agreementmodifications and addendasettlement statementdisclosuresappraisalscanceled checks and receipts

Assistant may also answer and direct phone calls, or assist visitors to real estate office. An unlicensed assistant may answer

general questions about the agent’s services but should pass specific questions about listings to the agent.

Assistant’s DutiesUpdating information

Agent should give listing info to MLS as soon as listing is taken, and any changes should be posted to MLS as soon as possible.Real estate assistant may be in charge of

giving info to MLS. (Some multiple listing services may require licensees to do this.)

Assistant’s DutiesUpdating information

Assistant may update info on agent’s website.

Assistant may also work on advertising, such as purchasing ad space or laying out ads.

Assistant’s DutiesClient communication

Communication with former clients can easily be neglected, but it’s critical to generating referrals.

Assistant’s DutiesClient communication

Unlicensed assistant can’t take over duties such as cold calling, but can prepare and send mass mailings (newsletters, holiday cards).

Assistant’s DutiesAppointments and open houses

Unlicensed assistant’s contact with buyers must be limited (can hand out flyers, but not answer questions about property’s price or condition).

Licensed assistant could answer questions about financing or help prospective buyers write up an offer.

SummarySafety Issues and Real Estate Assistants

Safety issues Real estate assistantsOffice administrationShowings and open

houses

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